1. Field of the Invention
The present invention relates to a system and method for determining a reward, and more particularly, to a point-of-use reward determination system and method.
2. Description of the Related Art
Many providers of goods and services offer rewards to those with whom they interact. The rewards may take many forms, such as discounts off of the normal price of a good or service, free goods or services, or other special offers. These rewards are most prevalent in consumer-oriented industries, where the consumer has a multitude of choices among competing products and services. The entities within these industries utilize reward-type programs to attract, maintain and expand their consumer base. It is believed that the reward applications modify consumer behavior, resulting in increased consumer loyalty. For example, in the transportation realm, monthly passes can be purchased at a price lower than the cumulative price of paying for the service on a daily basis. Thus, reward applications are key components of many providers of goods and services.
There are a number of disadvantages, impacting both providers and consumers, in current implementations of these types of programs. From the stand-point of the provider, the management and operation of these programs can require a tremendous investment. Many reward programs utilize a central computer system to track and update the reward status of the consumers participating in the program. The centralized tracking is inherently inefficient, as it requires the plethora of transaction information related to the reward program, from numerous transaction sources associated with a multiplicity of consumers, to be routed to one location for sorting and tracking. The complexity of such a system is further increased by the checks and balances that must be implemented to audit and account for each step of the process flow. This requires a large investment in both capital goods and human resources.
Further, the traditional reward system requires the development and classification of various product categories that must be managed throughout the system. For example, in transportation services, pass products as rewards may be offered for daily, weekly, monthly and other specially-defined periods or for other type services, like transfers. As such, the variety of product categories requires consumers to search through and choose the most appropriate product category that the customer wishes to have associated with the current purchase. This can be especially cumbersome and frustrating when implementing product purchasing through self-service terminal devices.
Additionally, with regard to prepaying for a good or service, the provider is often required to implement special accounting rules in allocating and tracking the money associated with such goods or services. The provider may have to allocate the money to a special prepaid pool. Then, the provider may need to track actual usage of the good or service associated with that prepaid pool to reconcile the prepayment with the usage. This requires additional investment in time, manpower and equipment for the provider.
From the consumer aspect, many times the benefit of the reward is outweighed by the cost of obtaining the reward. In the case of the monthly pass discussed above, for example, the customer is required to commit an up-front investment in order to obtain the reward. Typically the up-front investment is substantially greater than the near-term cost of the product or service. For example, the METRO system in Washington D.C. costs at a minimum $1.15 per ride and a customer, if they choose, can purchase a METRO card for exactly $1.15. But, the METRO offers a reward of 10% for METRO card purchases in excess of $20 and $30, respectively. Consequently, although a customer may need only $1.15 in METRO fare for his/her immediate use, if the customer fronts in excess of $20 he/she will be rewarded with an additional $2.00 on the purchased METRO card. Obviously, this reward system requires the customer to forecast their expected usage in order to determine whether or not the up-front investment exceeds the cumulative total of the expected usage. Further, the up-front investment may discourage many consumers from participating in the program. Even though a consumer may have an expected usage that would justify the up-front investment, the consumer may not be able to afford such a large investment. Additionally, these types of rewards offer little incentive to infrequent users.
Finally, many conventional reward programs implement the reward application through the customer's device (e.g., smart card microprocessor). This is disadvantageous for a numerous reasons. It is cumbersome to try and update or alter the reward application due to the number of devices that need to be updated. Further, assuming that a customer does not update his/her reward application, he/she could miss out on possible rewards.
Thus, the current systems and methods for implementing typical reward programs are often inefficient from the perspective of both the provider and the consumer.